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A surety bond is a guarantee between the following three parties:
1. Principal: The party required to obtain the bond.
2. Obligee: The party that requests the bond for security.
3. Surety company: The party that promises the obligee that the surety will pay if there is a claim.
Both the principal and surety company are 100 percent responsible to meet all obligations stated in the bond. In legal terms, the principal and surety company stand “jointly and severally” in regard to the obligations. Both are obligated to the obligee whom, along with the general public, is protected and may legally make a claim.
The principal is responsible for all obligations. Should the principal default on the claim, the surety company must then pay the obligations.
There are many types of surety bonds. Probate bonds are among the most common. The court system requires probate bonds to ensure that the person appointed by the court will carry out their duties in allocating a deceased or disabled person’s assets. Estate bonds, executor bonds and fiduciary bonds are other terms sometimes used for probate bonds.
License bonds are usually issued when the obligee is a government entity. This type of bond guarantees that the principal will comply with all codes and regulations that the obligee establishes. Examples of license bonds include a plumber’s license, an electrician’s license and a general contractor’s license.
A government entity issues a permit bond to grant a privilege. Examples of permit bonds are sign permits and driveway permits. Another type of permit bond is an auto dealer bond, which guarantees the auto dealer will comply with the law when he or she sells vehicles.
A mortgage lender bond is a permit bond that guarantees the lender or broker will abide by the law in protecting consumers. Retailers must purchase sales tax bonds to ensure they pay to the government all taxes on their sales.
No matter what type of surety bond you need, our experienced personnel at Simon Insurance can help you obtain it. All you need to do is fill out the online form or call us at 561.948.4141, and we will quickly respond with a quote and free consultation. Our word is our bond.